Impact of Dollar Devaluation on World Oil Industry

The role of the dollar as the key global currency has a biased effect on the price of imports and U.S. pass judgment of inflation because most primary products have their prices quoted in cosmos markets in dollar terms. Crude oil color is no exception and Organizations of Petroleum Exporting Countries (OPEC) members price their oil in US dollars and it is the preferred currency in the global uncouth oil trade for over 35 years. Dollar devaluation creates several problems for the conception oil industry. The objective of this paper is to examine the role of changes in the U.S. Dollar (Dollar) permute rate and its stupor on the populace oil industry. The paper aims to address the qualitative analysis of the followingImpact of exchange rates on oil supply by analyzing the followingoDrilling activitiesoOil productionoPurchasing originator and inflationImpact of exchange rates on demand of oiloDirect and indirect impact on demand.

Oil-exporting countries receive oil revenues in dollars (or their euro equivalent), and they use disparate currencies to import goods and services from unlike countries. any(prenominal) change in the exchange rate of the dollar affects the purchasing power of these countries, and then their real income. Impact of dollar devaluation would be different from champion country to another as each country has a different trade pattern.



International oil companies sell their crude oil in dollars, but they operate in various countries and pay some of their addresss in local currencies. Any change in the value of the dollar therefore affects their cost structure and profitability.

Dollar depreciation reduces the purchasing power and in turn increases domestic inflation levels of oil producing counties. In turn, it affects reinvestment in exploration, development, and maintenance.

The end consumers however use to the local currency to profane petroleum products. In the event of dollar devaluation, consumers in...

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